Is This the Worst Call I've Ever Made?

Shares of Qlik Technologies (NAS: QLIK) fell as much as 14% Friday after reporting worse-than-expected results the night before. The stock is down more than 22% year to date, sharply underperforming the S&P 500 over the same period.

More frustrating than the miss is Qlik's record. Revenue growth has slowed in each of the past five quarters -- from 50.2% in last year's Q3 to 14% this year. Interestingly, gross margin has held steady throughout that period, which suggests Qlik is paying a price for demanding a premium for its wares.

Source: S&P Capital IQ and The Motley Fool.

The good news? Competitors may not be faring much better. MicroStrategy (NAS: MSTR) has missed estimates in two of the past four quarters, while Actuate (NAS: BIRT) came in light during Q2. More recently, MicroStrategy revealed a management shake-up that raises questions about the company's third-quarter results due on Oct. 29.

And yet MicroStrategy's potential struggles pale in comparison to the real problems facing Qlik, a purported innovator I publicly backed as the best tech stock for 2011. Growth is decelerating exactly when it should be accelerating.

For his part, CEO Lars Bjork cited a "challenging business environment" that made it more difficult to sell to large accounts. Is that a fair excuse? Perhaps. At this point, what matters is that maintenance revenue (i.e., sales of upgrades and support) grew at a currency-adjusted 41%, while license revenue (i.e., sales to new accounts) grew 13% on the same basis. License revenue should be the bigger contributor. Instead, Qlik looks like the Oracle (NAS: ORCL) of its industry. The database king derived 51% of revenue from license upgrades and support in the quarter ended on Aug. 31.

A new deal with Teradata (NYS: TDC) for allowing Qlik users to do rapid visual analysis of Big Data may help to reignite growth, but recent history cautions me to presume nothing. I've made a bad call on this stock so far.

My next step is to reach out to business intelligence experts and users and assess the substitutes. Does Qlik still possess the technical advantages I cited when picking the stock for our Motley Fool Rule Breakers service? I'll post what I find out, so stay tuned to Fool.com for updates.

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